What’s Happening?!
Oracle take-over attempt of PeopleSoft is not dead.
SIA is forecasting a 19% increase in semiconductor sales
for 2004.
A 30 second ad during the Superbowl cost $2.3 million.
100 Best Places to Work
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
J.M. Smucker, Orville, Ohio
Alston & Bird, Atlanta
Container Store, Dallas
Edward Jones, St. Louis
Republic Bancorp, Owosso, Mich.
Abode Systems, San Jose
TDIndustries, Dallas
SAS Institute, Cary, N.C.
Wegmans Food Markets, Rochester, N.Y.
Xilinx, San Jose
100 Best Places to Work
25 Microsoft
28 Cisco Systems
34 Starbucks
35 Mayo Clinic
46 Intel
48 Network Appliance
55 Qualcom
62 Continental Airlines
72 IBM
78 Intuit
79 Harley-Davidson
84 Marriott International
86 Men’s Wearhouse
90 Granite Construction
91 Texas Instruments
94 International Data Group
96 FedEx
99 Nordstrom
100 Simmons
Chapter 7 Summary
Implementing a Vision: Strategy, Tactics,
and Business Plan
Three Key Elements
Vision - Identifies what the organization wants to
look like at some logical point in the future.
Strategy - How a company will achieve the longterm goal of the vision.
Tactics - More specific time-oriented, measurable
ways to make a vision a reality
Two Challenges for a New
Business Strategy
1. Deciding what things are worth doing.
2. Getting them done.
Elements of a Business Strategy





Competitive framework - definition and size of a
market including direct and indirect competitors.
Market Target – primary buyer or customer segment
for product or service.
Basis for Perceived Competitive Advantage –
how key customers define superior value of a product.
Key Profit Drivers – the factors that affect the
profitability of a product or service.
Product and/or Service Portfolio – relating a
product or service with the other four points.
The Three Components of a New Strategy
Vision
Internal
Assessment
External
Assessment
A New Strategy
Figure 7-1
Environmental Analysis
General Environment
Operating Environment
Competitive Positioning
ies
t
i
n
rtu ts
o
p
ea
Op Thr
Directions for Development
Company
Vision
Company
Strategic
History
Current
Strategy
Stakeholder
Analysis
Chosen
Strategy
Vision &
Strategy
Realized
Strategy
Company Analysis
Structure
s
Values/Culture
Skills
Figure 7-2
Resources
th
ng
re
St
W
s
se
s
ne
k
ea
Reprinted with permission from
The Strategic Management Blueprint
Cambridge, Ma: Blackwell, 1993.
Strategic Management Process
Managing for Results
•
•
•
•
•
•
•
•
Objectives
Authority
Responsibility
Training
Motivation
Performance
Results
Reward
Control
Figure 7-4
Information-Oriented Infrastructure is key
to a Responsive Competitive Strategy






Data Management – Providing access to timely, accurate
and cost- effective data.
User Applications – Support of application to the users in
functional and individual support.
Voice Management – Effective ways of communication
(i.e. E-mail, data access, video conferencing).
Network Management – Manage networks to assure high
levels of availability and performance.
Planning Process – Integrating information systems into
the business planning process.
Financial Strategy and Organization – How does an
organization afford, justify and pay for information
systems?
A Logical Goal
The goal is determine if a business strategy
can be more successful through the support
of information systems.
Possible Exam Questions

What factors will influence the selection of
the primary strategy?

What can be done to facilitate the transition
from vision to strategy to tactics?
Chapter 8 Introduction
Evaluating Business Strategies
and
The Use of Information Systems:
The Strategic Option Generator
A Systematic Approach
Vision
Strategy
Tactics
Business Plan
Competitive
Options
• Competitive
Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
as the Delivery Vehicle
• Success Factor Profile
Chapter Objectives

Evaluating Business Strategies

The use of the Information Systems to gain competitive
advantage
Strategic Option Generator
A model that can identify strategic opportunities
involving the use of information systems
STRATEGIC OPTION GENERATOR
TARGET
TARGET
SUPPLIER
CUST OMER
COMPET IT OR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
STRATEGIC OPTION GENERATOR
TARGET
SUPPLIER
CUST OMER
COMPET IT OR
THRUST
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
STRATEGIC OPTION GENERATOR
TARGET
SUPPLIER
CUST OMER
COMPET IT OR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
STRATEGIC OPTION GENERATOR
TARGET
SUPPLIER
CUST OMER
COMPET IT OR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
STRATEGIC OPTION GENERATOR
TARGET
SUPPLIER
CUST OMER
COMPET IT OR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
Analysis of Federal Express Using the
STRATEGIC OPTION GENERATOR
TARGET
SUPP LIER
Customer
CUST OMER
COMP ET IT OR
THRUST
DIFFERENTIATION
COST
Differentiation
GROWTH
ALLIANCE
Innovation
Growth
INNOVATION
MODE
Offensive
OFFENSIVE
DEFENSIVE
DIRECTION
USE
Use
PROVIDE
Provide
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
Where Are We?

Section I: The Business Environment
Chapters 2 – 5

Section II: The Company Environment
Chapters 6 – 7

Section III: The Use of Information Systems
A Systematic Approach
Vision
Strategy
Tactics
Business Plan
• Competitive Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
as the Delivery Vehicle
• Success Factor Profile
STRATEGIC OPTION GENERATOR
TARGET
SUPPLIER
CUSTOMER
COMPETITOR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
Biggest Mistake
Target, thrust and mode are fairly straight-forward
so they don’t tend to cause problems for students.
Direction is a source of problems and confusion since
the name of the element is not self-explanatory.
This element deals with whom the use of IS is
intended.
Federal Express Analysis
Using the Strategic Option Generator
TARGET
SUPPLIER
CUSTOMER
COMPETITOR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-2
UPS Analysis
Using the Strategic Option Generator
TARGET
SUPPLIER
CUSTOMER
COMPETITOR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-3
Chapter 9 Introduction
The Roles, Roles and
Relationships Concept
Roles, Roles and Relationships
The role of information systems: focused
on competitive priorities
 The role of senior management: positioning
and prioritizing the competitive role of
information systems
 The relationship: the need for an effective
working relationship between senior
management and the information systems
organization

Senior Management

Senior Executive: Communication and
direction to the information systems
organization of the long term goals of the
organization
– Making sure that major information systems are
properly funded and staffed
– Motivating people throughout the organization
to make things happen
Senior Managers of Major
Business Functions

Understand the competitive role of
information systems within the organization
– Identify and specify requirements for new
systems
– Making sure these new systems are adequately
funded through the budget process
The Role of the Users of
Information Systems

Operation level people make things happen!
– They need to be motivated by their managers to
support the information systems organization
and system changes
– Without their support a well designed, planned
and executed information system can fail
The Role of the IS Manager

Mission statement:
– To assure that the corporation’s present as well
as future demands for information, information
processes, information systems and computer
based technologies are provided for in such a
manner that the daily conduct of the business
will not be impacted and that the future
business opportunities can be capitalized and
managed by the corporation.
Roles, Roles and Relationships
Senior Management
Users
Functional
Management
Information Systems
Organization
Figure 9-1
Making Things Happen!
There are three factors that can be identified
that cause a business to initiate action in the
information systems area:
1. A threat to the business
2. The personal power of a senior manager
3. The need for business process improvements
Conclusion
The chapter focuses on approaches for
making these relationships work and
how to capitalize on them.
Chapter 9
The Roles, Roles and
Relationships Concept
Chapter 9
1. Roles, Roles, Relationship Concept and
Examples.
2. Triggers of Action.
3. Technology Transfer Through
Organizational Learning.
4. IS Organization as a Business within a
Business.
5. Outsourcing the management of IS.
IS as a Competitive Resource?
• Business competitiveness is a top
priority.
• What about Information Systems?
Success Can Be Elusive!
Why are some companies successful
while others are frustrated with a lack
of results and benefits from the use of
information systems?
Roles, Roles and Relationships
1. What organizational leadership is necessary to gain a
competitive advantage through the use of information
systems?
2. How does an organization determine the appropriate use of
information systems to gain a competitive advantage on an
on-going basis?
3. Does a specific event, activity or person tend to trigger the
start of a program that emphasizes the competitive use of
information systems?
Roles, Roles and Relationships
4. Can an organization sustain a competitive advantage
that is built on an information system?
5. Is this a broad based approach or is the successful
use of competitive information tied to a small
number of people playing key roles?
6. Does outsourcing the management of information
systems impact its possible use as a competitive
resource?
How Much is Based On
1. Business Leadership?
2. Information Systems Leadership?
3. A Proven Information Systems Track
Record?
4. Business Stability?
5. Information Content of the Business?
6. IS Cost and/or Risk?
Specific Roles of Information Systems
1. Business Process Partner.
2. Provide Access to Information.
3. Enhance Communications.
4. Provide Decision Assist.
Information systems
systems are
are strategic
strategic
Information
weapons, not
not cost
cost centers.
centers.
weapons,
Robert F. McDermott
Former USAA CEO
Roles, Roles and Relationship Concept
***********
1. The role of information systems is focused on competitive
priorities.
2. Senior management plays a major role in positioning and
prioritizing the competitive role of information systems.
3. There is an on-going working relationship between senior
management and the information systems organization to
sustain the successful use of information systems to compete.
Two Important Questions
1. Who Makes Competitive Strategy Decisions?
2. Who Makes Competitive Strategy Decisions
When the Process is Built on a Computer Base?
Top Executive Job Description
The primary role of the top executive
is to assure the long term viability
of the business.
The Role of the Senior Executive
The Person that Runs the Business on a Day-To-Day Basis
• Provide a long term vision for the future of the
business.
• Recognize the value of information to the
organization.
• Sponsor and participate in determining the role of
information systems.
• Communicate the importance of the
information systems role.
• Provide funding, including R&D, to address
the major requirements.
• Focus on results and benefits.
• Motivate to make things happen!
Role of Other Senior Management

Understand the role of information systems within
the organization.

Identify and specify requirement for new
information systems.

Justify and fund existing and new systems.

Sponsor their information systems on an on-going
basis.
Role of IS Executive

Function as a member of the senior management
team.

Provide an understanding of the realm of the
possible, feasible, affordable and achievable with
information systems.

Posture information systems as a service and
support organization in both fact and perception.
Using IS to Compete
Senior Management
Users
Functional
Management
Information Systems
Organization
Figure 9-1
Roles, Roles and Relationships
Leadership in two forms:
- Business Leadership
- IT Leadership
Information Systems Organization
Mission Statement
To assure that the corporation's present as well as
future demands for information, information
processes, information systems and computer-based
technologies are provided in such a manner that the
daily conduct of the business will not be impacted
and that the future business opportunities can be
capitalized on and managed by the corporation.
The Reeducation of UPS
Kent “Oz” Nelson ,CEO
• For decades UPS focused on managing physical
distribution.
• Today, new IT and relaxed regulations have made
logistics management the imperative.
• Information about a package is often as important as
the package itself.
• In one decade IT went from a limited factor to a
critical enabling resource.
Using Information Systems to
Gain a Competitive Advantage
An Essential Partnership
Using Information Systems to Compete
Senior
Management
Information
Systems
Organization
Figure 9-2
Relationships
1. A formal structure within the organization.
2. Integral to the way that the business is run.
Who Should Be the Primary
Initiator of Using Information
Systems to Compete?
• Senior Management?
• Functional Management?
• Information Systems Management?
Using IS to Compete
Primary Responsibilities
Direction
Conceptual
Approach
Specific
Approach
Senior
Management
7
2
1
Functional
Management
2
5
4
I/S
Management
1
3
5
10
10
10
Figure 9-4
Technology Transfer
Through Organizational
Learning
There is a direct correlation between
the successful introduction of a new
information system within an organization
and the learning curve of the primary
users.
Learning Curves
Information Technology
Computer-based Applications
Organization
Making It Happen!
Competitive
Advantage
Action
Initiators
Crisis
Management
Process
Improvement
Executive
Power
Figure 9-5
You manage things, but you
lead people.
Grace Hopper
Admiral
U.S. Navy
More on Leadership
1. Entrepreneur Founder
2. Corporate Managers
3. Corporate Caretakers
Bob Townsend
Up the Organization
A Business
Products/Services
Users
Suppliers
Board of Directors
Competitors
Figure 9-6
Information
Systems
Business
Customers
Suppliers
Steering Committee
Competitors
Figure 9-7
Steering Committee
I/T Needs
Real $s
Products
People
Direction
Information
Systems
Organization
Wants & Needs
Justification
Real $s?
Products
& Services
Constraints
Costs
Users
Suppliers
Opportunities
Competitors
Figure 9-8
Outsourcing
Hiring someone whose expertise can perform a
business function or activity better, more cost
effectively and/or in a more timely manner than
can be achieved in-house.
Also enables the company to focus on its core
competencies and those factors that mean the
difference between success and failure.
Outsourcing
Outsourcing is a current, major focus of
many business enterprises.
It continues to be a very hot topic.
Outsourcing
Logical?
Necessary?
Appropriate?
Cost-effective?
What?
With Whom?
Where?
How Long?
How Much Risk?
The Evolution of Outsourcing
The concept of outsourcing is not new. For decades,
companies have outsourced a number of functions such as
cafeteria service, janitorial service, security guards, payroll,
clerical support, manufacturing and distribution.
Outsourcing, by the old definition, was very specific, targeted,
and often project based. The company might design a product,
then outsource the manufacture of various components,
subassemblies, even the finished product.
Things have evolved to where anything that is not a core
business process is a candidate to outsource.
Outsourcing IS Management
• A Way to Save Money on a Short Term Basis?
• A Way to Avoid the Need to Manage Technical
People in an Environment that Keeps Changing?
• Strategically Significant?
UB example
Outsourcing Information
Systems Management
Is the outsourcing of the management of
information systems a contradiction of its
possible strategic significance?
Information System Goals
To help achieve organizational objectives by:
1. Supporting the decision making process.
2. Providing necessary information.
3. Providing a communications network.
4. Accommodating change within the
organization.
5. Maintaining an approach with a general
manager’s perspective.
IS Organization Business
1. Designing Information Systems
2. Building Information Systems
3. Maintaining and Running Information
Systems
IT Outsourcing Options
• Software Development and/or Maintenance
• Application Service Provider
• Global Network Provider
• Network Management
• Management of Entire IS Function
• IT Training
• Consulting and Reengineering
India’s IT Outsourcing Industry
GOOD STUFF, CHEAP
That's the reputation of India's IT outsourcing industry, and it's
both a blessing and a curse.
The blessing is that India has finally been able to move onto the
global stage by harnessing its greatest natural resource—
people—and focusing on filling the world's need for IT skills
and services.
India has grown its IT exports in less than a decade from $150
million to more than $4 billion—10.5% of India's total overseas
sales. Its success is built on a solid record for developing IT
talent as well as delivering top-notch legacy system
maintenance and software applications.
India’s IT Outsourcing Industry
The curse is that, despite what IT outsourcing has meant for
India's economy, the country's top IT vendors have been
typecast and they have major competition from Ireland, China,
the Philippines and Israel.
India’s IT Outsourcing Industry
Nobody can beat their price!
Software programming in India costs roughly $35 per hour, as
opposed to $200 in the United States—and their quality is
world-class.
Of the 23 companies worldwide that have been awarded the
US Software Engineering Institute's Capability Maturity
Model Level 5 rating for fault-free software engineering
processes (the equivalent of a perfect 10 in Olympic
competition), 15 of those elite companies are Indian, among
them Infosys, NIIT and Wipro.
China Versus India for Outsourcing
India’s global advantage in IT rests on a tripartite
foundation:
1) Good IT education
2) Competitive wages
3) English language competency.
On the first two, China already competes. That leaves
English which has improved significantly in the past ten
years.
US Corporations

Most managers are used to managing internal
resources and staff directly, and having total control
over the decision-making process in their area.

There are some fundamental differences in
managing an outsourced function.
The Corporation Today
A company must ensure that internal
resources are dedicated to core competencies
and that the right outside relationships are
established, maintained, and nurtured.
Chief Resource Officer (CRO)



New Organizational Model is Creating a New
Management Role.
Outsourcing has rapidly changed and evolved -- from
vertical to virtual, tactical to strategic, cost-cutting to
cutting-edge.
The stakes have increased, the risks and the rewards
have soared, yet the manner in which outsourcing
engagements are conducted and supervised has
remained the same.
Chief Resource Officer
The CRO is a strategic position, charged not with
managing corporate resources (time, money, and
personnel), but with managing the complex series of
relationships the modern corporation must have with
its outside resources.
The CRO evaluates the need for resources in each
function, finds the resources required outside the
company, and implements and nurtures the
relationship to the company's best advantage.
Chief Resource Manager
Outsourcing deals fall apart because there was no one
in a Chief Resource Manager position to manage and
follow-up on objectives and contractual agreements.

 A CRO-type
position means taking a global,
visionary, forward-thinking role in how to use
resources and make them effective and efficient for an
organization.
There is a definite need to manage change during the
life of an outsourcing contract.

CRO Skill Profile
1. Experience managing different businesses
2. Experience managing costs
3. Project management
4. Contract negotiations
5. Political and cultural consciousness
6. Ability to think out of the box
7. Comfortable with change
Evaluation Criteria
It is important in considering offshore outsourcing to
address the following with a potential vendor:
a) Do they have offices in US and in proximity to
them. Developing long term products require lot of
interaction with the vendor locally.
b) Get resumes of IT professionals who will work
on your project in foreign country and/or the US. If an
offshore vendor has experienced IT professionals working
for them for a good length of time, they have good retaining
and employee policies.
Evaluation Criteria
c) Understand the vendor process to develop and
deliver the project on a timely basis.
d) Get references on where they have successfully
completed similar projects.
e) Clearly understand the financial and property rights of
such a relationship.
f) Make sure that you have a way out if things do not go
well or according to schedule.
Benefits Realized from Outsourcing
IS Management
Balance Sheet Improvement
Cost Reduction
Actual Benefits
Expected Benefits
Improved Quality and Delivery
Increased Focus on Core
Competencies
Vendor Expertise
0%
10%
20%
30%
40%
50%
60%
70%
Deloitte & Touche Survey
A Well-Structured Alliance
• Strategic Synergy. The two (or more) organizations
together can achieve a high level of benefits.
• Clarity of purpose. The goals and benefits are explicit
and clear.
• Growth opportunity. The relationship--and its benefits-can be expanded.
• Less risk. The relationship reduces the level of risk.
• Excellent chemistry. There a good "fit" between the two
or more organizations.
• Win-Win Proposition. Each party can benefit fairly from
the relationship.
Outsourcing Resources

The Outsourcing Institute
http://www.outsourcing.com

ASP Outsourcing Center
http://www.asp-outsourcing-center.com
Some Basic Conclusions
1. There are common factors among companies that
have gained a competitive advantage through the
use of information systems.
2. The difference between the good examples and the
less successful ones is getting bigger.